SECOND DIVISION

G.R. No. 196112, February 26, 2014

GMA NETWORK, INC., Petitioner, v. NATIONAL TELECOMMUNICATIONS

COMMISSION, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated October 12, 2010
and a Resolution3 dated March 9, 2011 of the Court of Appeals (CA) in CA-G.R. SP No.
112437 which affirmed the Orders dated May 25, 20094 and January 8, 20105 of
respondent National Telecommunications Commission in BMC Case No. 93-538,
imposing a fine against petitioner GMA Network, Inc. for operating a radio station with
an expired provisional authority.

The Facts

Petitioner GMA Network, Inc. (GMA), formerly known as Republic Broadcasting

System, Inc., is a Filipino-owned domestic corporation engaged in the business of radio
and television broadcasting, which has been granted a legislative franchise to construct,
install, operate and maintain radio and television broadcasting stations in the
Philippines for a period of 25 years under Republic Act No. (RA) 7252,6enacted on
March 20, 1992.7crallawlibrary

On the other hand, respondent National Telecommunications Commission (NTC) is a

government agency which, under Executive Order No. (EO) 5468 dated July 23, 1979,
has been authorized to, inter alia, (a) [i]ssue Certificate[s] of Public Convenience for the
operation of communications utilities and services, radio communications systems, wire
or wireless telephone or telegraph systems, radio and television broadcasting system
and other similar public utilities, and (b) [g]rant permits for the use of radio
frequencies for wireless telephone and telegraph systems and radio communication
systems including amateur radio stations and radio and television broadcasting
systems.9crallawlibrary

GMA, by virtue of its legislative franchise, filed with the NTC an application for the
issuance of a Certificate of Public Convenience (CPC) to install, operate and maintain a
5-kilowatt amplitude modulation (AM) radio station in Puerto Princesa City, Palawan,
docketed as BMC Case No. 93-538. Pending approval, the NTC issued an Order10 dated
January 14, 1997, provisionally authorizing GMA to install, operate and maintain said
radio station. The provisional authority (PA) was valid for 18 months from date, or until
July 14, 1998, and expressly stated that it may be subject to amendment, alteration,
suspension, revocation or cancellation when public welfare, morals and national
security so requires or when grantee operates beyond its authorization granted. As
manifested in its Compliance11dated January 27, 1997, GMA accepted the terms and
conditions stated in the PA.

GMA failed to renew its PA upon its expiration on July 14, 1998. Nevertheless, it
continued its broadcast operations on the basis of temporary permits issued by the
NTC, the first of which, numbered BSD-0356-98, was issued on April 14, 1998 for the
period April 2, 1998 to April 1, 2001,12 and the second, numbered BSD-0195-2001, on
May 21, 2001 for the period April 2, 2001 to April 1, 2004.13crallawlibrary

On September 13, 2002, some four (4) years after the expiration of its PA, GMA filed
with the NTC an Ex-Parte Motion for Issuance of Certificate of Public
Convenience14 (Ex-Parte Motion), claiming: (a) full compliance with the terms and
conditions of its PA; and (b) its current operation of said radio station by virtue of
temporary permit number BSD-0195-2001. Meanwhile, GMA continued to operate its
radio station on the strength of NTC-issued temporary permits, the third of which,
numbered BSD-0302-2004, was issued on June 23, 2004 for the period April 2, 2004 to
April 1, 2007,15 and the fourth, numbered BSD-0197-2007, on March 27, 2007 for the
period April 2, 2007 to April 1, 2010.16crallawlibrary

In an Order17 dated February 26, 2009, the NTC set the Ex-Parte Motion for clarificatory
hearing and also directed GMA to submit a written explanation (within 10 days from
receipt) why it should not be administratively sanctioned for the motions late filing and
for operating its radio station with an expired PA.

In its Compliance18 dated March 12, 2009, GMA explained that its failure to timely
renew its PA was without deliberate intent but by mere inadvertence caused by the
confusion in the turn-over of the custody of its documents from its previous lawyer,
and that it immediately filed the Ex-Parte Motion upon discovering its omission.
Further, it alleged that notwithstanding the non-renewal of its PA, it had fully complied
with the terms and conditions thereof, and that its continued operation was actually
authorized by the NTC by virtue of the four (4) temporary permits covering the period
1998 to 2010. Finally, invoking the 60-day prescriptive period under Section 28 of
Commonwealth Act No. 146,19 as amended, otherwise known as the Public Service
Act (Public Service Act), it argued that the NTC could no longer sanction the late filing
of its Ex-Parte Motion considering the lapse of more than six (6) years from its filing on
September 13, 2002.20crallawlibrary

In an Order21 dated May 25, 2009, the NTC renewed GMAs PA for three (3) years, or
until July 14, 2012, but, pursuant to Section 21 of the Public Service Act, imposed upon
it a fine of P152,100.00 for operating its radio station with an expired PA from July 14,
1998 to September 13, 2002, or for 1521 days (the fine having been pegged at the rate of
P100 per day).

Consequently, GMA filed a Motion for Partial Reconsideration22 from the imposition of
the aforesaid fine, but the NTC, in an Order23 dated January 8, 2010, merely reduced its
amount to P76,050.00. Dissatisfied, GMA elevated the matter to the CA,24 contending
that: (a) the 60-day prescriptive period provided under Section 28 of the Public Service
Act already barred the NTC from imposing said fine; (b) the fine imposed amounts to
more than P25,000.00 and, hence, contrary to the policy embodied in Section 23 of the
Public Service Act; and (c) the imposition of said fine was improper considering that the
NTC had already authorized it to operate its radio station through temporary permits

The CA Ruling

In a Decision25 dated October 12, 2010, the CA dismissed the appeal, finding no merit in
GMAs contention that the violation committed had already prescribed pursuant to
Section 28 of the Public Service Act. Citing the 1962 case of Sambrano v. PSC and Phil.
Rabbit Bus Lines, Inc.26 (Sambrano), it held that the abovementioned 60-day prescriptive
period is only available as a defense in criminal proceedings, and not to those which are
administrative in character.27 Hence, since the assailed fine was imposed by the NTC to
administratively sanction GMA for its non-compliance with the conditions of its PA
pursuant to Section 21 of the Public Service Act,28 the 60-day prescriptive period cannot
be raised by GMA as a defense. Further, the CA found that the NTCs imposition of the
assailed fine at the reduced rate of P50.00 per day was well within the limit of Section 21
of the Public Service Act, noting too that the fine was, at best, minimal and conservative
in light of the duration of GMA violation.29 It appears though that the CA did not
address GMAs argument anent the fact that its continued operation was based on
temporary permits issued by the NTC.

Feeling aggrieved, GMA moved for reconsideration which was, however, denied in a
Resolution30 dated March 9, 2011, hence, this petition.

The Issue Before the Court

The essential issue in this case is whether or not the CA erred in upholding the
P76,050.00 fine imposed by the NTC upon GMA.

The Courts Ruling

The petition lacks merit.

A. Prescriptibility

While it was clearly established that GMA violated the terms and conditions of its PA
when it continued to operate its radio station despite the PAs expiration,31 it, however,
invokes the 60-day prescriptive period under Section 28 of the Public Service Act which
states that:chanRoblesVirtualawlibrary
Section 28. Violations of the orders, decisions, and regulations of the Commission
and the terms and conditions of any certificates issued by the Commission shall
prescribe after sixty days and violations of the provisions of this Act shall prescribe
after one hundred and eighty days. (Emphasis and underscoring supplied)
It asseverates that the NTCs attempt to penalize it for supposedly operating with an
expired PA should be deemed barred by the afore-cited limitation since the NTCs
action came only after the lapse of almost 10 years from the time its alleged violation
took place - that is, after the subject PA expired on July 14, 1998.32crallawlibrary

The Court disagrees.

The NTCs authority to impose fines for a public service utilitys violation or failure to
comply with the terms and conditions of any certificate/s issued by it is expressly
sanctioned under Section 21 of the Public Service Act which reads as
follows:chanRoblesVirtualawlibrary
Section 21. Every public service violating or failing to comply with the terms and
conditions of any certificate or any orders, decisions or regulations of the
Commission shall be subject to a fine of not exceeding two hundred pesos per day
for every day during which such default or violation continues; and the Commission
is hereby authorized or empowered to impose such fine, after due notice and hearing.

The fines so imposed shall be paid to the Government of the Philippines through the
Commission, and failure to pay the fine in any case within the time specified in the
order or decision of the Commission shall be deemed good and sufficient reason for the
suspension of the certificate of said public service until payment shall be made. The
remedy provided in this section shall not be a bar to, or affect any other remedy
provided in this Act but shall be cumulative and additional to such remedy or
remedies. (Emphasis supplied)
In Globe Telecom, Inc. v. NTC,33 the Court intimated that the NTCs imposition of a fine
pursuant to Section 21 of the Public Service Act is made in
an administrative proceeding, and thus, must comply with the requirements of notice
and hearing. Also, in the same case, the Court classified the fine imposed under the
same provision to be one which is regulatory and punitive in
character, viz.:34crallawlibrary
Section 21 requires notice and hearing because fine is a sanction, regulatory and even
punitive in character. Indeed, the requirement is the essence of due process. Notice and
hearing are the bulwark of administrative due process, the right to which is among the
primary rights that must be respected even in administrative proceedings. The right is
guaranteed by the Constitution itself and does not need legislative enactment. The
statutory affirmation of the requirement serves merely to enhance the fundamental
precept. The right to notice and hearing is essential to due process and its non-
observance will, as a rule, invalidate the administrative proceedings.

In citing Section 21 as the basis of the fine, NTC effectively concedes the necessity of
prior notice and hearing. Yet the agency contends that the sanction was justified by
arguing that when it took cognizance of Smarts complaint for interconnection, it may
very well look into the issue of whether the parties had the requisite authority to
operate such services. As a result, both parties were sufficiently notified that this was a
matter that NTC could look into in the course of the proceedings. The parties
subsequently attended at least five hearings presided by NTC.

That particular argument of the NTC has been previously disposed of. But it is essential
to emphasize the need for a hearing before a fine may be imposed, as it is clearly a
punitive measure undertaken by an administrative agency in the exercise of its quasi-
judicial functions. Inherently, notice and hearing are indispensable for the valid exercise
by an administrative agency of its quasi-judicial functions. (Emphases and underscoring
supplied; citations omitted)
In this relation, the Court, in Sambrano, ruled that the 60-day prescriptive period
provided under Section 28 of the Public Service Act can be availed of as defenses only
in criminal proceedings filed under Chapter IV thereof, and not in proceedings that
pertain to the regulatory or administrative aspects of a public service utilitys
observance of the terms and conditions of his permit to operate, viz.:35crallawlibrary
This Court has already held, in Collector of Internal Revenue et al. vs. Buan, G. R. L-11438;
and Sambrano v. Public Service Commission, G.R. L-11439 and L-11542, decided on July
31, 1958, that the 60-day prescriptive period fixed by section 28 of the Public Service
Law is available as a defense only in criminal or penal proceedings filed under
Chapter IV of the Act. Consequently, the Public Service Commission is not barred
from receiving evidence of the prescribed violations for the purpose of determining
whether an operator has or has not faithfully kept the conditions of his certificate of
permit, whether he failed or not to render the services he is required to furnish to the
customers, and whether or not the infractions are sufficient cause to cancel or modify
the certificate. Proceedings of this kind are held primarily to ensure adequate and
efficient service as well as to protect the public against the operators malfeasances or
abuses; they are not penal in character. True, the cancellation of the certificate may
mean for an operator actual financial hardship; yet the latter is merely incidental to the
protection of the traveling public. Hence, in refusing to admit evidence of prescribed
violations as part of the complainants case against the Philippine Rabbit Lines for a
modification or cancellation of the latters permit, we hold that the Commission
committed error.

xxxx

The order appealed from is modified in the sense that the respondent Commission shall
admit evidence of violations committed by the respondent Philippine Rabbit Bus Lines,
Inc., even if no complaint against such violations were filed within 60 days from their
commission. x x x. (Emphasis supplied)
It is well to note that the criminal proceedings under Chapter IV of the Public Service
Act, as mentioned in the Sambrano ruling, pertain to those found under Sections 23, 24,
25, and 2636 thereof as these provisions pertain to fines imposed in the discretion of the
court - which means they are imposed in criminal court proceedings - as
contradistinguished from Section 21 which may be imposed by the NTC (then, by the
Public Service Commission), after due notice and hearing,

In view of the foregoing, the Court thus finds GMAs reliance on the 60-day prescriptive
period under Section 28 of the Public Service Act to be misplaced considering that the
fine it assails was imposed in an administrative and not a criminal proceeding. Akin to
the action taken by the Public Service Commission in the Sambrano case, the fine
imposed by the NTC was made in line with its authority to enforce the rules and
regulations concerning the conduct and operation of GMA as a public service utility,
which was particularly meted out to ensure its compliance with the terms and
conditions of its PA. There being no cogent reason to depart from established
jurisprudence on the matter, the Court therefore holds that the NTCs action in this case
had not been barred under the parameters of Section 28 of the Public Service Act.

B. Unconscionability

Granting that the NTC was not time-barred to impose the fine, GMA asserts that the
amount so imposed (i.e., P76,050.00 in total, at the reduced rate of P50.00 per day for
1,521 days) is unconscionable as it contravenes Section 23 of the Public Service Act
which states that:chanRoblesVirtualawlibrary
Section 23. Any public service corporation that shall perform, commit or do any act or
thing forbidden or prohibited or shall neglect, fail or omit to do or perform any act or
thing herein to be done or performed, shall be punished by a fine not exceeding
twenty-five thousand pesos, or by imprisonment not exceeding five years, or both, in
the discretion of the court.
The argument is untenable.

The applicable provision is Section 21 of the Public Service Act as it specifically governs
the NTCs imposition of a fine not exceeding P200.00 per day for every day during
which the public service utilitys violation or non-compliance with the terms and
conditions of the certificate/s issued by the NTC continues. On the other hand, Section
23 of the Public Service Act deals with a public service corporations performance,
commission or doing of any forbidden or prohibited act under the same law, as well as
its neglect, failure or omission to do or perform an act or thing required thereunder. As
earlier mentioned, the proceedings under Section 23 pertain to criminal proceedings
conducted in court, whereby the fine imposed, if so determined, is made in the courts
discretion, whereas Section 21 pertains to administrative proceedings conducted by the
NTC on the grounds stated thereunder. As the present case evidently involves the latter
violation, Section 21 and not Section 23 of the Public Service Act applies. Thus, finding
that the fine imposed by the NTC at the reduced rate of P50.00 per day is consistent
with the P200.00 per day limitation under Section 21 of the Public Service Act, the fine
of P76,500.00 for GMAs failure to comply with the terms and conditions of its PA for a
period of 1,521 days was proper. The conscionability of the amount imposed should not
be at issue as it is the law itself which had provided the allowable threshold for the
amount therefor.

C. Effect of Temporary Permits

Lastly, GMA avers that it cannot be said to have operated its radio station illegally and
without authority from the NTC because the latter had successively issued temporary
permits which encompass the period during which GMA allegedly operated the same
station on an expired PA. The temporary permits expressly
state:chanRoblesVirtualawlibrary
REPUBLIC BROADCASTING SYSTEM, INC.

is hereby granted a Temporary Permit to operate a BROADCASTING STATION located

at Brgy. San Pedro, Puerto Princesa, Palawan.
GMA argues, therefore, that having been authorized to operate by the NTC itself
through the latters continued issuance of temporary permits, the imposition of the fine
becomes highly iniquitous if not legally unfounded.37crallawlibrary

The Court finds no merit in this contention.

GMA cannot rely on the temporary permits to justify its continued operation on an
expired PA. As the NTC itself discloses, a temporary permit is not intended to be a
substitute for a PA which must be constantly renewed despite the issuance of a
temporary permit. As clarified by the NTC itself in its Comment:38crallawlibrary
[A] P.A. refers to an authority given to an entity qualified to operate a public utility
for a limited period during the pendency of its application for, or before the issuance
of its Certificate of Public Convenience (CPC). It has a general scope because it is akin
to a provisional CPC in that it gives a public utility provider power to operate as such
and be bound by the laws and rules governing public utilities, pending the issuance of
its actual CPC.

On the other hand, a [t]emporary [p]ermit is a document containing the call sign,
authorized power, frequency/channel, class station, hours of operation, points of
communication and equipment particulars granted to an authorized public utility. Its
scope is more specific than a P.A. because it contains details and specifications under
which a public utility x x x should operate x x x pursuant to a previously updated
P.A. (Emphases and underscoring supplied)
As may be gleaned from the NTCs statement, the operational validity of a temporary
permit flows only from a previously updated PA. This means that there should be an
effective PA before a temporary permit is issued. The latter is a specific issuance which
proceeds from a pre-requisite PA. While GMA may have been able to secure the
successive issuance of temporary permits from the NTC to cover even the PAs expired
period, this does not detract from the apparent irregularity of the procedure. The fact
remains that GMA operated its radio station between the time that its PA expired on
July 14, 1998 and the application for its renewal was filed on April 13, 2002. Without an
updated PA therefor, GMA should not have been issued temporary permits.

GMA must be reminded that the NTC, insofar as the regulation of the
telecommunications industry is concerned, has exclusive jurisdiction to establish and
prescribe rules, regulations, standards and specifications in all cases related to the
issued Certificate of Public Convenience and administer and enforce the same.39 As
such, and considering further its expertise on the matter, its interpretation of the rules
and regulations it itself promulgates are traditionally accorded by the Court with great
weight and respect. As enunciated in Eastern Telecommunications Phils., Inc. v.
International Communication Corporation:40crallawlibrary
The NTC, being the government agency entrusted with the regulation of activities
coming under its special and technical forte, and possessing the necessary rule-making
power to implement its objectives, is in the best position to interpret its own rules,
regulations and guidelines. The Court has consistently yielded and accorded great
respect to the interpretation by administrative agencies of their own rules unless there
is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion
clearly conflicting with the letter and spirit of the law. (Emphases and underscoring
supplied)
Equally significant is the principle that the State cannot be put in estoppel by the
mistakes or errors of its officials or agents.41 Hence, whatever irregularity had attended
the issuance of the temporary permits in this case does not render correct what appears
to be erroneous procedure. The NTC itself recognizes this when it stated in its
Comment that:42crallawlibrary
Technically speaking, [GMA] should not have been issued a Temporary Permit. The
Temporary Permits relied upon by [GMA] were issued to it on the assumption that its
P.A. was up to date. Had [NTC] known that [GMA] had an expired P.A., it would not
have granted [GMA] a Temporary Permit to operate its subject radio broadcasting
station. Before [GMA] could legally operate its subject radio station, it should have both
an updated P.A. and a Temporary Permit for such purpose.
Verily, the Court agrees with the NTCs submission that although GMA was granted
numerous temporary permits, it does not remove the fact that it was operating on an
expired PA, which infraction is subject to the penalty of fine under Section 21 of the
Public Service Act.43 The Court, however, expresses that the NTC should be more
circumspect with the enforcement of its internal procedures if only to prevent any
future incident similar to the present case. The ideal of public accountability befittingly
demands that administrative agencies, such as the NTC, devise appropriate governance
systems to ensure that its rules and regulations are followed and complied, and
deviations therefrom deterred and quelled. Truth be told, it is through an honest and
effective bureaucracy that the government gains the peoples trust and deference.

All told, the fine against GMA in the amount of P76,500.00 for its failure to comply with
the terms and conditions of its PA stands, without prejudice to any separate
administrative proceeding which may be initiated against any public officer responsible
for the aforementioned irregularity.

WHEREFORE, the petition is DENIED.

SO ORDERED.